Do you know the definition of Statement of Work? or Have you ever heard the term; Statement of Work before? If you are working in the field of project management, most probably the answer is “yes”. It is an important project document that saves a project manager from many troubles if it is created properly. Or even if you make tiny mistakes while creating it, you may find yourself in big trouble. In this short guide, we will furnish you with the best practices to create your own Statement of Work. We will also provide you a statement of work template example.
What is a Statement Of Work? – Definition of Statement of Work
Before to start, let’s discuss the definition of Statement of work. A statement of work is an agreement between a client and the contractor that includes many items such as deliverables, timelines, requirements, pricing, terms, and conditions to define what’s included within a project.
It is a binding contract that contains all kinds of details, project-specific activities, and deliverables. From this aspect, the statement of work and the scope of work can be used interchangeably because they refer to the same concept.
Unlike other key project documents (baseline budget, project schedule, etc.) the statement of work provides a high level of detail regarding deliverables, criteria, and requirements for each phase. This level of detail provides clarity to each party involved in the project. It is used to manage and document the expectations of the client.
As a project manager, while creating the SOW, you need to think every detail to overcome potential problems to be faced in the future. Because, for each party, the statement of work becomes the main document to determine what’s ‘in scope’ and what’s not. Before to provide a template, let’s talk about why you need a statement of work.
Why Do You Need a Statement of Work?
Each party involved in the project needs a complete statement of work to know exactly what they are agreeing to. For better understanding, let’s review the example below.
Assume that you are a project manager of a software development project. The client asked you to add extra features to the product. When you checked the SOW, you saw that all the features of the product are determined and extra coding is not inside the product scope. During your discussion with the client, you showed what is included in the scope and the client recognized that you are right. Therefore, the client should pay extra if they want additional coding.
This simple example demonstrates that, if the statement of work is not written properly, it may create disputes between the parties.
When Are You Going to Create the SOW?
Creating a statement of work is tedious work so you don’t want to produce before the client decides to do the project. However, it may be too late to create the SOW for you after the client approves the project. Therefore, you need to create the SOW before the approval of the project in order to avoid forgetting a lot of details.
What is included in the Statement of Work?
The SOW should have an optimum detail level. This means it shouldn’t have too much or too little detail. If the SOW includes inadequate details, that may lead to uncertainties. If the detail level of the SOW is too much, you may find yourself in inflexible processes while performing the project.
So what a SOW should include? What are the important parts of a SOW? There is no definite way to create a SOW. Even if you create ten or one hundred pages, you are setting the parameters and the boundaries of the project.
Simply put, a Statement of work template should include the information below for the project.
- What is the project and what are the objectives?
- Who has the authority to approve the project?
- What are the major phases and tasks?
- What are the major deliverables?
- What are the major project milestones?
- How much will it cost?
- Assumptions and Constraints
Statement of Work Example
As we mentioned above, a statement of work should include project information such as governance detail, project overview, deliverables, milestones, timeline, assumptions, etc. Below example demonstrates how to structure all these project information while creating a SOW.
- Project Process
- Major Project Milestones
- Overall Project Governance
- Terms and Conditions
- Human Resources
- Deliverables & Delivery Schedule
- Rate Schedule
- Payment Terms
- Business Terms & Conditions
Statement of Work Template Example
Here below you can find a sample statement of work template. You can review the template and create your own considering your project’s requirements.
6 Steps to Create a Statement of Work Template
Here below we provide 6 simple steps to create your own Statement of Work Template. Keep reading to understand each step.
1. Break Down the Project into Meaningful Steps
Break down the project into meaningful steps and understand the requirements of each step. Create separate statements of work for each step.
2. Define the Deliverables and Processes
Define the deliverables and processes clearly, set the parameters and the boundaries of the project. Decide what should be and what shouldn’t be inside the scope.
3. Create a Strong Foundation
Create a strong foundation and make everything clear in order to avoid misunderstandings and be specific.
4. Write the Assumptions
While creating the SOW, write your assumptions so that everybody could understand what is in and what is out of the scope.
5. Keep the Details at an Optimum Level
Make the SOW as clear and short as possible. Keeping the details at an optimum level will help you to avoid many words with multiple interpretations.
Once you have completed the SOW, share it with your project team and receive their feedback to ensure that all the items are clearly defined.
Each section of the SOW should be created carefully in order to avoid multiple interpretations and misunderstandings. This important project document lays the foundation for your project success. In this article, we talked about the definition of statement of work and provided a template to guide you to create it for your project. You can share your approaches by using the comments section.